Technical assistance to support ACP country delegations in Geneva 1

on the Post-July Framework Process (Focal Points 2)

Contract No – 7 ACP – RPR – 753- Project No. 13

OUTLINE OF PRESENTATION CONCERNING

TRADE RULES AND REGIONAL INTEGRATION AGREEMENTS AND ACP COUNTRIES
By Dr. A.S. Wagner

I. OVERVIEW OF THE CURRENT STATUS OF REGIONAL INTEGRATION AGREEMENTS

AND ACP COUNTRIES.

Rule making and the 52 percent of the WTO membership

 Regional Trade Agreements

II. THE CURRENT NEGOTIATING STRATEGIES OF ACP COUNTRIES

 Key points
I. Special and Differential Treament
II. Preference erosion and EBA

 Negotiators needs

III. Assess costs and benefits derived from their given

position
IV.

 methodological approach of our

proposal.

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 Technical assistance to support ACP country delegations in Geneva 2
on the Post-July Framework Process (Focal Points 2)
Contract No – 7 ACP – RPR – 753- Project No. 13

PRESENTATION CONCERNING ACP COUNTRIES’S POSITIONS ABOUT RULES AND REGIONAL

INTEGRATION AGREEMENTS, by Doctor A.S. Wagner

Two important facts need recalling before going into the specifics of the Doha Round and
ACP countries. Firstly, if we group all European Union members as it should be under one
trading entity , the fact is that the first 36 major world exporters of merchandise generate
93.5 percent of total world merchandise exports while the 31 importers of merchandise
absorb 92.7 percent of total world merchandise imports. Therefore, roughly speaking, 93
percent of total world trade is performed by at most 35 countries1.

Secondly, another fact is that ACP countries represent 52 percent of the WTO
membership while they only account for less than 2 percent of total world trade in
merchandise2! Therefore improving rules and regional trade agreements between 52 percent
of the membership will only affect 1.2 percent of total world trade. A brief statistical
analysis of the main regional trade agreement confirms their limited impact on world
welfare level. Yet this does not mean that considerable progress could not be made to
transform existing regional trade agreements into engines of growth for ACP ad other
developing nations. It suggests, however, that WTO and large trading players should design
a trading system which vigorously encourages the growth of developing countries belonging
to the less skewed side of trading nations according to their share in total world trade.
( 267 words)

1. OVERVIEW OF THE CURRENT STATUS OF REGIONAL INTEGRATION AGREEMENTS

AND ACP COUNTRIES.

Currently, the dominant thought among many WTO members, is to return to

multilateralism as opposed to regionalism. Peter Sutherland puts it simply thus: “"We
believe strongly that political leaders and the WTO itself must go back to the basic
arguments in favour of open trade and a rule-based trading system 3.” Such statements
hardly agree with efforts being made by the USA, which is promoting several new regional
trade agreements schemes in the Americas and the Pacific region not to speak of its
former Caribbean Basin initiative.

Rule-making and the 52 percent of the WTO membership

Some of the problems of rules making in international trade stems from the belief
that “one suit fits all”. This is basically a legal approach. Haïti is the same as Brazil; India
is the same as Mauritius or the Seychelles. The rules should be the same for all
irrespectively of their size or income levels. For decades ACP enjoyed special and
differential treatments they wish to extend under the new round. Yet, in many WTO
members, frequently enough, for simple fiscal reasons, their institutions may not have the
same degree of sophistication and reach as those of larger or richer countries.

Therefore, first, from their viewpoint, several rules to be reviewed and revised
concerning anti-dumping, subsidies countervailing duties, pre-shipment inspection,
sanitary and phytosanitary measures, rules of origin, which many low to low middle income
members find difficult to apply in practice. In several cases they are looking for extension
of the already special periods they were for implementation.

1
WTO. International Trade statistics. 2003 See Table 1.5. page 19 leading exporters and importers , 2003. Actually 1.45 for
Africa and .011 for the Caribbean: sub total 1.56.
2
Considering trade in goods and services would further accentuate the dysfunctional relations.
3
WTO The Future of the WTO, www.wto.org quoted in the Financial Times “ How to make the world trade fairer”.

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on the Post-July Framework Process (Focal Points 2)
Contract No – 7 ACP – RPR – 753- Project No. 13

Second important agreements for development policy such as TRIP, TRIPS and GATS
also pose problems to many ACP countries. Here too, special treatment is being requested.

Thirdly, several rules dealing with customs laws and practices are also being viewed
as negotiable. In particular due to previous tariff reductions and erosion of ACP
preferences, which are considered now to be nearly non-existent.

Regional Trade Agreements

In the specific regions, which have become crowded with many agreements and sub
agreements not to mention bilateral agreements, two articles are looked for review and
reform, i.e., GATT Article XXIV4 and GATS article V, on economic integration5. The two
articles clearly need amending, as their practical implementation has been difficult. It is
also in this area that positive aspects of free trade areas or customs unions could be
reformed and adapted to ensure better compliance and more concrete results for the
country members. The articles are also forcing the European Union (EU) to review and
revise its policy towards all ACP countries.

To conclude, according to some experts developing countries still hold positions

essentially geared to defending S& D treatments and exceptional treatment under WTO.
Several ACP countries support their negotiating position claiming 6 that:

“Developing country Members, particularly the LDCs [least developed], experience

peculiar problems, which constrain their beneficial participation in the multilateral
trading system. Fundamental to these are structural imbalances in their economies as
well as distortions arising from historical trading relations, both of which combine to
undermine productive and trade capacity of these countries. It follows that developing
countries cannot address their development challenges and participate meaningfully in
the international trade system, if they assume the same types and levels of obligations
as envisaged in the Uruguay Round Agreements. On the contrary, they must be
accorded S&D treatment that is effective and meaningful.”

II. THE CURRENT NEGOTIATING STRATEGIES OF ACP COUNTRIES

 Antecedents7

Space limitation prevent us from going into great details on the reasons for S&D ACP
treatments and their historical conditions of accession to GATT and, consequently, to
WTO. A series of conventions governed the EU-ACP trade relations. Most recently the
COTONOU provided a “global framework” under which moves toward reciprocal trading
relations in conformity with GATT spirit and WTO Rules8 should be made. A recent step
towards reciprocity has been taken by the EU in the form of the EBA Initiative9 and
received some acceptance from ACP countries.

 Key points

4
Legal Texts, Understanding in the interpretation of article XXIV. Page 31 and following.
5
Legal Texts page 333
6
Michel Hart and Bill Dymond. “Special and Differential Treatment and the Doha “Development “ Round. Journal of World
Trade 37 (2) 395-415. 2003. Page 412.
7
Commission Européenne . Livre Vert sur les relations entre l’Union Européenne et les Pays ACP à l’Aube du 21 ème
siècle. : Défis et options pour un nouveau parternariat. Office des publicatiosn Bruxelles. 1997.
8
As spelled out in the Legal Texts of the Uruguay Round.
9
For EBA see http://www.europa.eu.int/comm/trade/miti/devel/eba.htm.

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 Technical assistance to support ACP country delegations in Geneva 4
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Contract No – 7 ACP – RPR – 753- Project No. 13

The key points considered by ACP countries under Doha Round and with EU trade
authorities are: first to maintain their particular advantages obtained under the Lomé IV
until January 1rst, 2008. This transition period would provide time for ACP adjusting to
new trading conditions. As much as feasible of advantages in the commodity protocols will
be maintained but ultimately the Bananas and Sugar protocols will have to be discarded.
In this regard CARICOM ‘s Regional Negotiating Mechanism asserted their position on sugar,
banana, rum, rice and meat had not changed. It has also insisted on receiving technical
assistance in several fields of economic development.10

 Negotiators needs

Our assistance will help ACP countries:

1. Assess the costs and benefits of their adopted positions and if necessary, revise
them. RTAs have frequently been more window dressing than practical
economic instruments of integration and economic progress. This must be
changed and ACP must offer tradable position for S&D treatments;

2. Adopt policy negotiation positions based in economic and financial facts

corresponding to their special conditions and locations. Under this heading
programmes of technical assistance would have a pride of place.

3. Negotiating mandates will be prepared for all countries and, time allowing

4. renewed negotiations for the existing regional trade agreements in which ACP
countries are involved.

 the methodological approach of our proposal.

The approach to reviewing and rules dealing with regional agreements involves two sides.

On the one hand, ACP countries in their various RTA have made commitments and
adopted rules which may or many not be WTO-compatible. These rules for members and
non-members ACP must be amended to be harmonised with WTO rules. This task would
consist in assessing the conformity of RTA with existing rules in the Legal Texts for RTA.

On the other hand, the necessity to make the EU/ACP countries agreement
reciprocal and conform to WTO rules that is fitting into the Cotonou negotiating framework
will require an analysis of the benefits requested/ granted with 1/ the Cotonou Convention
and 2/ the special and differential treatments requested from EU by ACP countries. This
may involve a country-by-country analysis of a two-side compatibility: WTO compatibility
and RTA compatibility.

In our view the harmonisation of the three dimensional items from negotiation (i.e.,
Cotonou-EU/ACP country/WTO) and the agreement of EU and ACP countries on what
should be changed and what will be accepted will form the basis for a negotiation mandate
either at the country level and/or at the RTA level. Reaching an agreement along those
lines between EU, WTO members and ACP countries would mean a significant advance in
establishing a multilateral trading system in Africa and Pacific region. The Caribbean
Regional Negotiating Mechanism with a view to further integration in the Americas already
follows the approach.

10
A more detailed account of the current situation is presented by UNCTAD in “Trade negotiation issues in the Cotonou
agreement : agriculture and Economic Partnership agreements.” United Nations. Geneva. 2003

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Contract No – 7 ACP – RPR – 753- Project No. 13

In principle the assessment of WTO compatibility would be made under four major
headings11: 1. Reach or coverage of the RTA ; 2. Procedural provisions (transparency,
open-decision making and institutional infrastructure); 3. Substantive provisions
(approximation, mutual recognition, regulatory discretion; 4. implementation and
enforcement (effective reviews and remedies, promotion of effective and competitive
markets.

Such review and analysis would offer the opportunity to reconcile EU and ACP
respective negotiating positions since many of the ACP countries are members of at least
one RTA in the African, Caribbean and Pacific regions.

Geneva, Thursday, 24 February 2005, 2:52 PM.

11
For a more detailed reference consult: Stephen Woolcock A framework for assessing regional trade agreements: WTO-Plus
pp18-31 in Gary Sampson and Stephen Woolcock. “ Regional, multilateralism and economic integration: the recent
experience. United Nations University Press. New York. 2003 and Martin and Mari Pangestu. Options for Global Trade . A
view from the Asia-Pacific. Cambridge University Press. Ch. 1. Pp. 1-25.

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